Pinnacle West Stock: From Cheap To Overvalued Again (NYSE:PNW)

US Treasury yields were lower on Tuesday as concerns over rising global government debt supply, which moved bond yields higher last week, were partly assuaged by expectations that Japan could trim longer-dated debt issuance.

Japan is mulling a cut to super-long bond issuance, sources told Reuters on Tuesday, as policymakers seek to soothe market concerns about worsening government finances. Expectations for a change in long-dated debt supply sent yields on Japanese bonds tumbling and rippled across markets, dragging down both the yen and US Treasury yields.

Further easing pressure on long global bonds, Britain’s debt management chief Jessica Pulay told the Financial Times that the UK had pivoted to shorter-term borrowing this year. Meanwhile, euro area bond yields dropped on Tuesday after French inflation data came in weaker than expected.

“This is definitely a step in the right direction,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale, in reference to news from Japan. “A lot of the pressure last week, especially after the 20-year (Treasury) auction, was much more of a global move than anything specific to the US,” she said.

The U.S. Treasury Department saw soft demand for a $16 billion sale of 20-year bonds last week, as investors worried about the country’s increasing debt burden. Soft demand for the 20-year paper was also seen as reflecting broader concerns over rising global debt levels.

The Treasury Department will sell $69 billion in two-year notes later on Tuesday, followed by $70 billion and $44 billion in five- and seven-year notes on Wednesday and Thursday.Given the poor auction last week and ongoing worries over demand for U.S. Treasuries, investors will keep a close eye on the auctions, even if demand for the front end of the curve tends to be less impacted by longer-term fiscal concerns.